Coeur d’Alene Trumps First Majestic’s Orko Takeover Bid

By Liezel Hill and Thomas Biesheuvel -
Feb 13, 2013

Coeur d’Alene Mines Corp., an Idaho-
based silver producer, offered to buy Orko Silver Corp. for
C$379.9 million ($379 million) in cash and shares in an attempt
to trump a rival bid from First Majestic Silver Corp.

The offer values Orko at C$2.70 a share, a 26 percent
premium to First Majestic’s all-stock bid based on yesterday’s
closing price, according to Bloomberg calculations. First
Majestic has until midnight Pacific time on Feb. 19 to match the
proposal, which Orko’s board has determined is superior, Coeur
d’Alene said in a statement today.

The value of Vancouver-based First Majestic’s bid,
announced at C$2.72 a share, has dropped as its stock has
declined since the proposal was made public on Dec. 16. First
Majestic and Coeur d’Alene are seeking control of Orko’s La
Preciosa silver project in Mexico, which may contain as much as
110 million ounces of silver, according to Orko’s website.

Coeur’s offer “comes as a surprise to us given that Orko
had run a formal process last year,” Daniel Earle, an analyst
at TD Securities Inc., said in a note today. “It is possible
that First Majestic could introduce a significant cash component
in a revised offer to match Coeur’s proposal.”

Keith Neumeyer, chief executive officer of First Majestic,
declined to comment in an e-mail today.

Orko gained 22 percent to C$2.60 at the close in Toronto,
the biggest rise since First Majestic’s bid was announced. Orko
has increased 65 percent since Dec. 14.

‘Demonstrated’ Record

Coeur d’Alene is offering holders of Vancouver-based Orko a
mix of stock or warrants and cash for their shares. The company
fell 10 percent to $21.06 in New York. First Majestic rose 1
percent to C$18.17.

“We have a demonstrated track record of developing,
commissioning and operating large-scale precious metals assets
as well as the financial resources necessary to bring Orko’s La
Preciosa project into production,” Coeur d’Alene CEO Mitchell J. Krebs said in the statement.

Silver futures for March delivery slid 0.5 percent to
settle at $30.869 an ounce on the Comex in New York. Prices have
gained 2.1 percent this year.

First Majestic’s Orko bid was one of two announced
takeovers of silver companies last year. The other was the
company’s acquisition of Silvermex Resources Inc., according to
data compiled by Bloomberg. The total value of the deals was
$490.1 million with an average premium of 51 percent, the data
show.

Coeur, which mines in Mexico, Bolivia and the U.S., also
said today it’s offering to repurchase all of its 3.25 percent
convertible senior notes due 2028. There were $48.6 million of
notes outstanding as of Feb. 12, it said.